Causeway Bay defends title as Asia's most expensive retail street

HONG KONG, CHINA--(Marketwired - Nov 15, 2017) -

Hong Kong's Causeway Bay ranks as Asia's most expensive street with annual per sq ft rents at US$2,725 (HK$21,255), and being second globally after New York's Upper 5th Avenue, which commands an annual per sq ft rents at US$3,000

Softening in rents in Causeway Bay helped bring in a greater diversification to trade mix in the area, such as lifestyle merchandise and more PRC brands.

New York's Upper 5th Avenue and Hong Kong's Causeway Bay retain their first and second place rankings, while soaring rents have seen London's New Bond Street rise to become the world's third most expensive retail street, according to Cushman & Wakefield.

The annual Main Streets Across The World report, now in its 29th edition, tracks 451 of the top retail streets around the globe and ranks the most expensive in 68 countries and regions by prime rental value utilizing Cushman & Wakefield's proprietary data (Table 1).

Upper 5th Avenue remains the most expensive main street in the world, with annual rents at an average of US$3,000 (HK$23,400) per square foot per year (psf/yr) - the same level as in 2016. Despite a 4.7% fall in average rents to US$2,725 (HK$21,255) psf/yr, Hong Kong's Causeway Bay retains its second place position, as rental correction in the district is almost complete towards the end of this year.

London's New Bond Street leapt into third place in the global rankings in 2017 as rents increased by more than a third (in local currency) on the previous year to US$1,720 (HK$13,416) psf/yr. The increase relative to other global destinations underlines the strength of London's premium retail offer and strong demand for prime retail space in the West End, which brought a resurgence in leasing deals at the beginning of 2017 despite having a pause in activity in the initial aftermath of the EU referendum last year.

Report author Darren Yates, Head of EMEA Retail Research at Cushman & Wakefield, said: "Despite a lot of negative headlines, global retail remains as dynamic and vibrant as ever in response to technological and demographic change across the world. Premium retail destinations, including New York's Upper Fifth Avenue, Hong Kong's Causeway Bay and London's New Bond Street, are highly sought after by international brands seeking to create engaging retail experiences that offer something new and exciting. The most innovative retailers are combining their online and physical platforms to create a seamless omni-channel experience for the customer, but profile and location play such a crucial role in the premium retail experience."

Table 1: TOP 10 MOST EXPENSIVE LOCATIONS BY COUNTRY (source: Cushman & Wakefield)

Rank
2017

Rank
2016

Location

2017 RENT
US$/psf/yr

1

1

New York, Upper 5th Avenue (49th - 60th Sts)

3,000

2

2

Hong Kong, Causeway Bay

2,725

3

4

London, New Bond Street

1,720

4

6

Milan, Via Montenapoleone

1,433

5

3

Paris, Avenue des Champs Élysées

1,407

6

5

Tokyo, Ginza

1,200

7

7

Sydney, Pitt Street Mall

1,000

8

8

Seoul, Myeongdong

914

9

9

Zurich, Bahnhofstrasse

883

10

10

Vienna, Kohlmarkt

490

Hong Kong's Causeway Bay remains the world's second most expensive retail street, although rents on the main shopping streets continued to fall by around 5% over the course of the year. This follows a sharp decline in visitors from mainland China, which has prompted caution among many retailers, particularly at the upper end of the market.

Mr Kevin Lam, Cushman & Wakefield's Executive Director, Head of Retail Services, Hong Kong, said, "Despite the drop in rents during the course of 2017, the pace of drop in CWB rents has slowed since the middle of this year, and the correction is expected to finish towards year-end. Rents in Causeway Bay will be in a better position next year, although there will still be some distance between the rents of Causeway Bay and of Upper 5th Avenue in New York."

"Ranking at second place globally reflected a softening of high street rents in Causeway Bay, but the plus side is this healthy correction has driven greater diversification in trade mix on the high street. Apart from the luxury trades which have always been dominant in Causeway Bay, there are more lifestyle merchandise, F&B and PRC brands entering the district, which would enhance the shopping experience for customers. As the case of duplex and triplex leasing becomes rarer, we expect the number of varieties of shops will increase."

Meanwhile, mainland China's retail market continues to evolve as a rapidly growing consumer base of savvy, brand-aware shoppers seek out new and sophisticated retail experiences. Beijing's Wangfujing is ranked 11th in the global table, with annual rents at $477 psf/yr. The city's online retail market has experienced exceptionally strong growth and internet sales now account for circa 18% of the total, although 12.4 million sq ft of new space is expected to become available in the Fengtai and Tongzhou districts in 2018 as new developments complete.

About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Across Greater China, there are 20 offices servicing the local market. The company was named the top China real estate services firm in four categories of Overall, Valuation, Agency/Letting and Research by Euromoney's 2017 Survey. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients' ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)